Critics say Sweden’s mining regulations need fixing

AFP, STOCKHOLM

Sweden scores high in international rankings of mining nations, but concern is growing that the Scandinavian country is selling its vast underground resources far too cheap.

While concession fees are kept deliberately low to attract miners, critics say all 9 million Swedes could and should benefit the same way that their Norwegian neighbors all profit from their national oil wealth.

“This is something we own together,” said Jesper Roine, associate professor at the Stockholm School of Economics.

Besides, he added, minerals have an intrinsic value before they are dug out of the earth and they should be priced accordingly, the way all other raw materials are priced.

As it is now, the Swedish state earned only a little over 30,000 euros (US$41,000) in concession fees in 2012, the last year for which figures were available.

Why this tiny number? Because fees are a mere 0.2 percent of total output value, of which three-quarters go to the landowner and only one-quarter ends up in the state treasury.

By comparison, Canadian provinces typically charge 10 to 15 percent and Australia implemented a 30 percent mining tax in 2012.

Some economists and environmentalists suggest increased mining fees to safeguard the natural environment of Sweden’s mineral-rich north, while also saving up for a huge nest egg to help future generations.

Behind the debate is a fact that may surprise: Sweden is known for its slick design and ingenuous high-tech, but it also produces more iron than any other European nation and boasts the world’s two largest underground ore mines.

Its mineral resources are attracting the attention of business heavyweights from across the globe.

Avalon Minerals and Dragon Mining, both Australian companies, have prospecting and concession licenses in Sweden. Canadian company Eurasian Minerals has exploration projects in Sweden, one of them in cooperation with Chile’s Antofagasta.

The low concession fees do not mean that Sweden is getting no revenue from mining.

The Swedish government earns 12 billion kronor (US$1.8 billion) from mining operations via dividends from state-owned mining company LKAB and from regular taxes.

However, to observers, such as Roine, this is not enough.

He is the coauthor of a recent report on Swedish earnings from mineral extraction that proposes new tariffs to compensate for the gradual depletion of resources and a state-owned fund similar to Norway’s oil fund, which invests the billions the country earns to last for future generations once the resources are gone.

“It’s not the same as saying that the companies ... shouldn’t be compensated for their costs and the risks they are shouldering. They should absolutely be paid for that,” he said. “But nevertheless it’s the case that the business doesn’t materialize out of thin air. Some of the value of the mineral wealth already exists from the outset, and this makes it a very special industry compared with others.”

Sweden has been ranked in the top 10 of attractive mining nations three years in a row by the independent research organization Fraser Institute, this year only topped by neighboring Finland. Low fees, low corruption, good infrastructure and a stable society are some of the attractive factors.

However, analysts and the government say the fees must be low to keep miners coming and investing in Sweden, thus playing an important role in creating jobs and economic development.